ECB lending rule change could make an extra €10 trillion available to banks

The European Central Bank is considering a major easing in the rules on the
assets it will accept from struggling lenders in return for loans that could
expand by more than €10 trillion (£8.3 trillion).

The ECB has been discussing easing its collateral requirement and the final rules are still not clear, with a further meeting expected on January 26.

Analysts at Citigroup said allowing eurozone banks to use outstanding loans as collateral to borrow money from the ECB would increase the pool of available collateral by €11.7 trillion.

"While the details are to be decided, one principle would appear to be clear: central banks will create as much liquidity as needed to back stop the European banking system. Banks will not run out of cash or collateral," said Citigroup.

The ECB has been discussing easing its collateral requirement and the final rules are still not clear, with a further meeting of its council expected to discuss the matter on January 26.

The opening last month by the ECB of a new three-year funding programme for banks helped calm market fears over the eurozone banking system.

The Bank of England was criticised earlier this week by UBS for its refusal to contemplate new measures to support British banks.